How much does the U.S. government waste yearly? $125 billion

From fraud to honest mistakes, federal agencies report an overall error rate of 5 percent in their spending

February 19, 2011|By Sally Kestin, Sun Sentinel

What: Improper payments in federal programs

How much: $125 billion

Who's responsible: Federal and state agencies and dishonest or misinformed citizens

Each year, the federal government squanders an astonishing amount of your tax dollars on payments that are just plain wrong, including Social Security checks to the dead or incarcerated, free lunches to schoolchildren who don't qualify and unemployment benefits to the employed.

In 2010, improper payments in federal programs totaled $125 billion. That's more than six times the total budget for NASA.

"It absolutely is one of the big costs'' to the nation's taxpayers, said U.S. Sen. Bill Nelson, D-Fla. "The most egregious [example] is paying out these fraudulent claims.''

In Florida and throughout the country, prison inmates have filed fake tax returns and collected millions in unearned refund checks from the IRS, Nelson said. In South Florida, scammers have set up storefronts and bilked Medicare for non-existent treatment of seniors.

In a rare show of unity, Congress last year unanimously passed a law aimed at reducing wasteful spending by federal agencies, and President Barack Obama has set a goal of cutting erroneous payments by a total of $50 billion over the next two years.

With the nation's debt now topping $14 trillion, "the federal government can't afford to continue throwing away taxpayer dollars,'' said U.S. Rep. Tom Rooney, a Republican whose district includes part of Palm Beach County.

Every dollar misspent means less for genuine needs from flood protection to food safety.

Federal agencies are required by law to calculate their misspending, and reported an overall error rate of 5 percent last year based on a sample of payments. Considering that the U.S. government pays out more than $2 trillion a year, any mistakes quickly add up to mind-blowing amounts.

Here's a look at the most error-prone programs in 2010, according to PaymentAccuracy.gov and federal agencies, and the effects in South Florida:

Many of the mispayments were due to coding errors on claims or for care found later to be medically unnecessary, hospitalizing patients who could have been treated as outpatients, for instance, or paying for equipment such as power wheelchairs for seniors still able to walk on their own.

In other cases, Medicare paid twice for the same service or for tests, doctor visits or therapy sessions that were never performed.

Fraud is a huge problem for Medicare, particularly in senior-rich South Florida.

On Thursday, authorities announced charges against 111 doctors, nurses and others across the country – including 32 in Miami – in what was billed as the largest takedown ever for Medicare fraud. The accused are charged with bilking Medicare out of more than $225 million for services that were unnecessary or never provided.

•Medicaid, the health program for uninsured low-income Americans, improperly paid out an estimated $22 billion, or about 9 percent of the total payments it made in 2010. In many cases, beneficiaries did not meet eligibility requirements.

At other times, Medicaid paid for services that were not covered or reimbursed providers who were not properly licensed or registered.

In Florida, Medicaid overpayments have totaled more than $70 million over the past four years and included bills submitted for treating dead people, according to the state Agency for Health Care Administration, which administers Medicaid in Florida. The government recouped more than $54 million of those overpayments.

•The recession sent an increasing number of Americans to the unemployment lines and caused the number of improper benefit payments for the jobless to go up to about $17 billion, or 11 percent of the total nationwide. Florida's improper payment rate was found to be nearly 9 percent.

Financed largely through employer taxes, unemployment insurance is administered by the states and pays benefits to people who lose their jobs through no fault of their own.

More than one-quarter of the incorrect payments went to people who had already returned to work, according to the U.S. Department of Labor. Other beneficiaries failed to meet program requirements by not actively looking for work or registering with a state employment service. Still more should not have been entitled to benefits because they voluntarily left their jobs or were fired for misconduct.

More than $3 billion paid out was due to fraud by people falsely claiming to be out of work or who had stolen someone else's identity to collect unemployment benefits.